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Need to Buy or
Sell a Home!
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Understanding Title
Insurance
By: Raynor James
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Title to a property is a record detailing the owners of the property and
rights associated with the ownership. Title typically shows a progression of
ownership from the first owner to the current one. Title is a fairly simple
concept, but when it goes wrong it is a nightmare. That is where title insurance
comes in.
Title Insurance
Title insurance guarantees that the title on a property is marketable when
you purchase the home, condo, land, etc.
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You should always pay for title insurance. It typically costs a few hundred
dollars and will save you a bundle if problems arise.
When you buy title insurance, a title insurance company researches the title for
the property. The insurance company will look to see if the title is clear.
“Clear” simply means that the seller is truly transferring title to you and no
other person can claim ownership. While this sounds fairly simple, rest assured
that title problems arise all of the time.
Title Problems
You might be wondering how you could possibly have title problems. Here are a
few examples:
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1. Divorcing Couples – Divorce is unpleasant and sometime very ugly. In
particularly nasty situations, one spouse may attempt to sell a home without
telling the other. To gain clear title, you need both spouses to sign off on the
sale. If you don’t, you are going to become a party of the divorce proceedings.
Now, wouldn’t that be fun? 2. Estate Sales – If you are purchasing a house as part of an estate
sale, there can be real problems. The heirs may not be getting along and in an
effort to “get what’s mine”, may try to sell the residence without including all
the heirs in the transaction. If you buy this home, you could end up involved in
a lawsuit filed by an heir left out of the transaction. |
3. Ingress and Egress Issues – Title to a property can have technical
issues related to egress and ingress. Occasionally, one finds title to a
property that is so messed up that the owner doesn’t have the right to enter or
leave the land because to do so would require crossing another person’s
property. In short, the property is landlocked and something must be worked out
with the neighbors. Typically, a solution comes in the form of hard, cold
cash…lots of it.
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These are just a few issues that can arise with title. With real estate, unique
issues can arise all the time.
If you buy title insurance, you don’t have to worry about problems with title.
If a problem arises, you calmly pick up the phone and call the title insurance
company. The insurance company will come up with a solution, even if it means
paying you for bad title.
About the Author: Raynor James
is with FSBOAmerica.org, sell your home online. Sellers list your home for free the first month.
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